Forex today was dominated by geopolitical headlines where a thwarted missile attack in Riyadh, Saudi Arabia, and U.S. President Donald Trump’s threats to launch missiles at Syria drove investors into gold, the yen and a late exit out of stocks as well.
Indeed, just as Trump makes friends again with one world leader, Xi, he takes up his place in Syria where the markets are now focussed and butts heads with Russian leaders.
As a result of the mixed geopolitical outlook, the USD was also mixed. Late in the day, it was evident that the attack was not seen as imminent and the dollar recovered some lost ground through 89.60 within a range of between 89.355 - 89.670. The US 10yr treasury yield initially fell from 2.80% to 2.76% on the Russian news before dropping back to 2.78%.
The focus was set to the FOMC minutes momentarily as well, which were taken as slightly more hawkish but the Fed fund futures yields were hardly changed, pricing the chance of the next rate hike in June around 85%. The dollar did catch a bid on the back of the minutes, but only temporarily as investor's concerned stayed with geopolitics. As for data, the US CPI was mostly in line.
As for other currencies, the single unit catches a bid on the Russian fall out, climbing from 1.2360 to 1.2396. The pair then dropped to 1.2347 on the FOMC minutes and suffered from offers in the yen cross as well. However, there was a late bounce in the NY shift to a close of around 1.2360 as the dollar buckles at its daily highs.
GBP/USD was holding onto early gains in European trade when the pair was taken up through stop territory onto the 1.42 handle but succumbed to pressures and dropped back down to the 1.4060 level, on the back of the FOMC minutes. Sterling then recovered back to 1.4180 for the close having traded in the NY range of 1.4221-1.4162. The BoE expectations are keeping the pound a buy on dips.
EUR/GBP was ending the NY session at 0.8722 and higher by +0.04% having traded within a range of between 0.8740-0.8709. Weak UK data was supporting the bid with the UK manufacturing disappointing, way off the mark, ( Feb Manufacturing Output MM, -0.2%, 0.2%).
USD/JPY was in a European range of between 107.25-106.90 range but then slipped towards the 106.62 Mon-Tues lows on the Syrian angst. The FOMC gave the pair a needed boost and Geopolitical fears receded later in the day, leaving the pair around the 106.80 level for the close and Asian handover.
As for the antipodeans, the Kiwi was starting out the day at 0.7365, in a tight range early on after a strong performance this week on risk off trade. The bird caught a bid on commodities bouncing and yen weakness and neared 0.7380 but lost its perch on a comeback in the dollar after the FOCM minutes. NZD/USD was pushed back to 0.7355 for the close. Much the same can be said for the Aussie. AUD/USD opened around in a bullish chop and AUD/JPY jumping in a risk-on session. AUD/USD reached as high as 0.7772 early but then fell back to 0.7744 on the fade and FOMC minutes nailing in the nail while commodities slipped back.
Key notes from US session:
Fundamental wrap: the drums of war, Russia/Trump/Syria, keep investors on their toes
Key events ahead:
Analysts at Westpac noted the key events coming up as follows:
"Australia Feb housing finance data is due at 11:30am/9:30am Sing/HK. Westpac looks for a -1% dip in total loans, consensus is -0.4%. There is limited scope for a surprise because banking industry data is already available. The big picture is a modest slowdown in lending since Q3 2017."
"Asia’s calendar is quite busy. The Bank of Korea is fully expected to keep its benchmark rate at 1.5% but the commentary will be watched. Singapore releases Feb retail sales, which could help shape estimates for Q1 GDP due tomorrow (along with the MAS policy review). India releases data on Mar CPI and Feb industrial production."
"Eurozone Feb industrial production is due in the London morning. The US data calendar is low key – weekly jobless claims and Mar export and import prices."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.